Free Markets, Free People
Ed Morrissey sums up the “new” GM:
Americans sunk tens of billions of dollars into General Motors in 2008 and 2009, money which they won’t see any time soon, if at all. The Obama administration strongarmed senior creditors in an unprecedented politically-engineered bankruptcy to get taxpayers to eat the costs of old pension obligations and boost the UAW. All of this was done in the name of making GM a stronger company so that they could eventually pay back the bailout and make better decisions in the future. [emphasis mine]
Remember the other day when I talked about corporate cultures and how it was important to change them when a company is going down the tubes because of their present one? And how bankruptcy – real bankruptcy – has a tendency to help make that corporate culture change a reality.
Yeah, well that didn’t happen at GM with predictable results:
Attention U.S. taxpayers: You now own a piece of a French car company that is drowning in red ink.
That’s right. In a move little noticed outside of the business pages, General Motors last week bought more than $400 million in shares of PSA Peugeot Citroen – a 7 percent stake in the company. …
Peugeot can undoubtedly use the cash. Last year, Peugeot’s auto making division lost $123 million. And on March 1 – just a day after the deal with GM was announced – Moody’s downgraded Peugeot’s credit rating to junk status with a negative outlook, citing “severe deterioration” of its finances.
In other words, General Motors essentially just dumped more than $400 million of taxpayer assets on junk bonds.
An analysis by auto industry consultants IHS said it is “somewhat baffling that GM is willing to get involved in an alliance that it frankly does not need for size or complexity, while still avoiding any public plan to rationalise its European production, cut costs, or deal with labour rates.”
Well, the investment in Solyndra was “somewhat baffling” to most analysts, but it didn’t stop the Department of Energy from guaranteeing it, did it?
GM needs a 7% stake in Peugeot like it needs the Chevy Volt. Don’t forget, it loses money every year in Europe. And now it owns 7% of another car company posting huge losses.
It hasn’t yet been able to pay the tax payers back for the “investment” they were forced to make in the company although they have found the time to pay bonuses to employees and executives, some of whose accomplishments apparently include this decision.
But … and you knew there had to be one… what does that mean in relation to the job losses we’ve suffered during this recession?
In the past, the number for this month would have been a good number because it would have reflected a maintenance level of job creation. Essentially the number of jobs created kept pace with the expansion of the labor market as new workers entered it.
But we’ve lost millions and millions of jobs in the past 39 months. So what is it going to take just to get back to even (i.e. where we were prior to the recession)?
Here’s an infographic to graphically present the problem:
To actually climb out of the unemployment hole that the recession dug, we need to see 755,000 jobs a month for 7 months to bring us back to pre-recession job levels. Why 7 months? Heh … well, you figure it out.
UPDATE: According to James Pethakoukis, the unemployment rate also lacks validity. He makes a point Dale has made any number of times:
If the size of the U.S. labor force as a share of the total population was the same as it was when Barack Obama took office—65.7% then vs. 63.9% today—the U-3 unemployment rate would be 10.8%.
The following statistics were released today on the state of the US economy:
The Employment Situation: 227,000 net new jobs, unemployment rate at 8.3%, average hourly earning up 0.1%, weekly hours unchanged. Basically, the report is mixed. The labor force participation rate rose by 0.2% to 63.6%, so more people are coming back to the labor force. The number of employed people in the household survey has risen back to the December level, after dropping last month. Non-farm payrolls continue to increase. At the same time, hourly earnings and hours are basically unchanged, so there’s not a lot of hiring pressure. Using the personal methodology I use, that assumes full employment is a 66.2% labor force participation rate, the "real" rate of unemployment declined to 12.08% from last month’s 12.48%.
The Monster Employment Index jumped 10 points in February to 143. Monster says this reflects a normal seasonal bump.
The January trade deficit grew by $2 billion to $52.6 billion, mainly due to rising oil prices.
Wholesale trade inventories grew by 0.4%, but the stock-to-sales ratio is unchanged at 1.15.
Remember the official line from the White House when Obama rejected the pipeline in January?
Obama rejected a cross-border permit for the Keystone pipeline in January.
He said the decision was not based on the merits of the project, but instead in response to a 60-day permit decision deadline that Republicans demanded in a December payroll tax cut bill. Obama said the deadline would short-circuit review.
Of course the State Department had previously favorably reviewed the pipeline and recommended its approval (08/29/11)
David L. Goldwyn, who until earlier this year had served as Secretary of State Hillary Clinton’s Special Envoy and Coordinator for International Energy Affairs, said in an interview aired over the weekend that Clinton would likely approve plans for a contentious pipeline to deliver oil from Canada’s tar sands to the Texas Gulf Coast.
"I think that balancing jobs, energy security — a country which has increased production potentially the size of Libya — I think the case for a pipeline is overwhelming, and she will approve it," Goldwyn said, speaking to Platts Energy Week, an energy-themed television program.
On Friday, the State Department issued its final Environmental Impact Statement, concluding that the proposed 1,700-mile pipeline would have "no significant impact" on the environment and recommending that the project move forward, despite warnings from environmental groups that, among other things, the project would help accelerate the warming of the planet.
So, in reality, other than petulance, politics and an agenda, Obama had no real reason to not approve the pipeline. The review had been completed. In fact it seems clear, given his disapproval, that the process was irrelevant to him in reality and the Republicans were just the latest excuse not to approve the deal.
Republican Senator Sen. John Hoeven (R-N.D.) introduced an amendment to the transportation bill concerning the pipeline:
The amendment, unlike previous GOP efforts to simply create a deadline for an administration permit decision, would have bypassed the administration and approved construction, although the legislation would still require Obama’s signature.
Of course Obama didn’t want to be seen vetoing something which polls have repeatedly said the vast majority of the nation is for. So he actively lobbied against the passage of the amendment.
Obama lobbied wavering Senate Democrats before yesterday’s vote. He urged them to reject an amendment to legislation funding transportation projects that would have overturned his administration’s decision to deny a permit for the pipeline until an alternative route was proposed to bypass an environmentally sensitive area in Nebraska.
But, as reported previously, many pipelines already criss-cross the Oglala aquifer in Nebraska with no problem. Additionally, the governor of Nebraska made it clear that it wasn’t necessary to reject the pipeline – there were some pretty easy workarounds.
So here, in the midst of rising gas prices and high unemployment, a politician is presented with a positive way to impact both and declines it based purely on ideology vs. what’s best for the nation.
Unfortunately he has allies in the Senate – enough to defeat the amendment that would have either allowed the pipeline to be built or forced Obama to veto it.
The vote was 56-42 with 11 Democrats defecting. Most of those, as you might imagine, are from states in which oil production is important.
And, as usual, opponents were scraping the bottom of the barrel for reasons not to vote for the amendment:
Sen. Ron Wyden (D-Ore.) and other Democrats opposed to the project argued oil would end up going to Asia, and that the pipeline could even raise costs in the U.S.
As well as the usual nonsense:
“Once again Republicans are trying to play politics with a pipeline project whose route has yet to be proposed, and despite the claims that this would somehow solve the pain families are feeling at the pump today, according to the company it would take years before it transported a drop of oil,” [White House spokesman Clark] Stevens said in a statement.
But history gives lie to Stevens claim. Remember when President Bush lifted the moratorium on oil and gas exploration on the East and West Outer Continental Shelf in 2008. Not a single well had been drilled when it was announced and the price of oil took a significant drop:
The politics at issue here are those which are detrimental to the nation.
And those would be the ideologically driven politics being played by the White House, and none other.